baird global industrial conference 2018 · 2018-11-06 · baird global industrial conference 2018...
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Baird Global Industrial Conference 2018
Beth Wozniak, CEO
Stacy McMahan, CFO
November 6, 2018
Forward-Looking Statement
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CAUTION CONCERNING FORWARD-LOOKING STATEMENTS
This presentation contains statements that we believe to be "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. All statements, other than statements of historical fact are forward-looking statements.
Without limitation, any statements preceded or followed by or that include the words "targets," "plans," "believes," "expects,"
"intends," "will," "likely," "may," "anticipates," "estimates," "projects,“ “forecasts,” "should," "would," "positioned," "strategy,"
"future," or words, phrases or terms of similar substance or the negative thereof, are forward-looking statements. All
projections in this presentation are also forward-looking statements. These forward-looking statements are not guarantees of
future performance and are subject to risks, uncertainties, assumptions and other factors, some of which are beyond our
control, which could cause actual results to differ materially from those expressed or implied by such forward-looking
statements. These factors include the ability to realize the anticipated benefits from our separation from Pentair (the
“Separation”); adverse effects on our business operations or financial results as a result of the consummation of the
Separation; the ability of our business to operate independently following the Separation; overall global economic and business
conditions impacting our business; the ability to achieve the benefits of our restructuring plans; the ability to successfully
identify, finance, complete and integrate acquisitions; competition and pricing pressures in the markets we serve, including the
impacts of tariffs; the strength of housing and related markets; volatility in currency exchange rates and commodity prices;
inability to generate savings from excellence in operations initiatives consisting of lean enterprise, supply management and
cash flow practices; increased risks associated with operating foreign businesses; the ability to deliver backlog and win future
project work; failure of markets to accept new product introductions and enhancements; the impact of changes in laws and
regulations, including those that limit U.S. tax benefits; the outcome of litigation and governmental proceedings; and the ability
to achieve our long-term strategic operating goals. Additional information concerning these and other factors is contained in our
filings with the Securities and Exchange Commission, including nVent’s Registration Statement on Form 10, as amended. All
forward-looking statements speak only as of the date of this presentation. nVent Electric plc assumes no obligation, and
disclaims any obligation, to update the information contained in this presentation.
Key Definitions and Notes
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Except as otherwise noted all references to 2018 and 2017 represent our results for
the period indicated, presented on an adjusted basis
“Organic Sales" refers to GAAP revenue excluding (1) the impact of currency
translation and (2) the impact of revenue from acquired businesses recorded prior to
the first anniversary of the acquisition less the amount of sales attributable to
divested product lines not considered discontinued operations
Segment income represents operating income exclusive of non-cash intangible
amortization, certain acquisition related expenses, costs of restructuring activities,
impairments and other unusual non-operating items
Return on sales ("ROS") equals segment income divided by sales
See appendix for GAAP to non-GAAP reconciliations
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Leading Electrical Company Focused on Connection & Protection
Diversified portfolio with strong financials
Industrial
Company Characteristics
VerticalsSegments Geographies
US & Canada
65%
Western Europe
22%
Developing
11%
OtherDeveloped
2%45%Infrastructure
12%
Enclosures
44%
Thermal Management
30%
Electrical & Fastening Solutions
26%
Commercial & Residential
27%
Energy
16%
Industry-leading positions and strong brands
Focused on improving utilization, lowering costs and maximizing customer uptime
Attractive margin profile
Strong free cash flow generation
2017 Financials
20%ROS
$2.1BRevenue
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Mission-Critical Solutions That Create Value
Our value and differentiation drive customer loyalty
Our products…
• Connect and protect
across broad range of
applications
• Meet stringent regulatory
standards and
certifications
Our products…
• Protect equipment and
electronics in hazardous
environments
• Help avoid the high cost
of failure
Hazardous
Location
CoolingReduced facilities
operating costs by ~75%
Our products…
• Reduce labor cost in
installation
• Improve utilization
• Minimize downtime
• Reduce total cost of
ownership
Rail Surge
Protection
Mission-Critical
SolutionsHigh Cost of Failure
Customer Productivity &
Total Cost of Ownership
Stainless
Steel
Enclosures
Purge and
Pressurization
Systems
nVent Strategy
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Drive Productivity and Velocity
One nVent
Focus on Attractive
Verticals
Accelerate
Innovation and
Connected Solutions
Grow Globally and in
Developing Regions
Pursue Targeted Bolt-on Acquisitions
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Segment Highlights
Executing on our strategy
Enclosures Thermal Management EFS
The Elexant Family
More options to connect to
products, customer’s systems
Intuitive user interface
Data driven insights providing
actionable information
CADDY Seismic Bracing
Differentiating features that
reduce total installed cost
ERIFLEX Flexibar Advanced
Conductors that are unique,
safer, and flexible
Data & Networking Solutions
New commercial team
Commercializing high density
liquid cooling
Driving awareness and
demand
Focus on Attractive Verticals
Accelerate Innovation and Connected
Solutions
Accelerate Innovation and Grow Globally
Q3 ’18 nVent Performance
8*Non-Cash Amortization
**Transactional FX
Sales ($ in millions) Financial Highlights (YoY)
Segment Income ($ in millions)
Organic sales up 5%
• Enclosures: Up 8%
• Thermal Management: Up 2%
• EFS: Up 6%
Segment Income up 1%, up 5%
excluding corporate and other costs
ROS 20.4%
Other Items
• Adjusted Tax Rate of ~18%
• Net Interest Expense of ~$12M
• Shares of ~182M
Pro Forma Free Cash Flow $151M
year-to-date
• Includes $46M of separation and related costs
$564
PriceQ3 ’17
($7)$19
Volume
$11 $0
Acq. FX Q3 ’18
$541~4%YoY
Q3 ’17
$15* ($17)($1)
Growth/
Price/Acq.
$19$0
FX Inflation Prod.
$15*
Q3 ’18
$114 $115
ROS
21.1%
ROS
20.4%2.4% 0.1% (3.2%) 0.0%
~1%YoY
3 pts 2 pts 0 pts -1 pts
+ Pricing
+ Volume
+ Volume
Leverage
+ Productivity
- Investments
- FX**
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Capital Allocation Update
Disciplined, prudent approach to capital allocation
*Net of Cash, including operating leases and pensions
• Paid down $50M of debt in September
• Target Debt to EBITDA Leverage* 2 – 2.5X
• Investment Grade enables competitive cost of capital
• Credit rating BBB-(S&P) and BBB (Fitch)
• Focus on bolt-on acquisitions
• Target ROIC greater than WACC in 2 years
• Accretive at 1 year
• Generated year-to-date Free Cash Flow of $151M
• Paid a regular cash dividend of $0.175 per share in Q3 and Q4
• Target competitive dividend at ~40% of Free Cash Flow
• Share repurchase program: Announced $500M repurchase authorization over 3 years
• Target capex ~2% of Sales
• One nVent growth strategy
• Digital and other growth initiatives
• Productivity and velocity
Manage LeverageReinvest in
the businessM&A
Return Excess Cash to
Shareholders
Establish Track Record as an Independent Public Company
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Long-term Financial Framework
Long-term value creation goals
Differentiated growth1-2% above GDP
Margin Expansion
Top Tier Performance
Free Cash Flow =
100% Adjusted Net Income
Long-Term Goals
Revenue
Segment Income
EPS
Cash Flow
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Summary
Building a high-performance growth company
Industry-leading positions in growing verticals
Attractive segments with differentiated growth opportunities
Clear strategy and focused on driving organic growth
One nVent approach accelerating performance
Consistent and strong free cash flow generation
Look to extend current successful strategy into 2019
We are a Leader in Connection and Protection
Thank You
Appendix
Reported to Adjusted 2018 Reconciliation
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Reported to Adjusted 2017 Reconciliation
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Organic Sales Growth & Free Cash Flow Reconciliation
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